SunOpta’s volume-driven growth is positioning the plant-based and better-for-you business for M&A as it steers toward breaking a debt leverage target.

CEO Brian Kocher, who took over from Joe Ennen on 2 January, said the company is on course to sever the three times debt ratio barrier by the end of the year when acquisitions will become an option.

“We’ll look at attractive ROI projects, we’ll look at potential share buybacks based on the stock price at that point in time, or attractive M&A deals,” the SunOpta chief told analysts as he discussed first-quarter results to 30 March.

“Those continue to be the options we continue to evaluate every day. And once we get there towards the end of the year, we’ll give you a further update.”

The plant-based milks, nutritional shakes and snacks maker reduced debt to $258.8m in the quarter, from $263.2m at the end of 2023. The leverage ratio consequently dropped to 3.1 times from 3.4.

Kocher outlined three priorities he aims to deliver under his watch, with revenue growth top of the tree.

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First-quarter revenue grew 18% to $183m, led by a 23.5% volume increase, which accelerated from 14.7% in the final three months of last year and 5.5% in the third quarter.

“To continue delivering strong volume gains, it is essential that we optimise our production to support the demand-side momentum in our business and expand our gross margin,” Kocher said as he elaborated on the second priority of “increasing the efficiency and the effectiveness of our supply chain”.

In pursuit of that objective, SunOpta opened a new manufacturing facility in Texas in February for plant-based milks and creamers.

Kocher said the first two production lines are ramping up capacity, while a third came on stream at the end of the reported first quarter.

Using external and internal data, he estimates the shelf-stable plant-based milks category will grow mid-single-digits in 2024.

In another area of SunOpta’s portfolio, Kocher said fruit snacks are delivering the “highest growth rates among our product categories” at 31% in the opening three months of the year, a 15th straight quarter of double-digit growth.

SunOpta disposed of its frozen açaí and smoothie bowls business in March to Sambazon following the sale, by Kocher’s predecessor Ennen, of a batch of frozen fruit assets to Canada-based Nature’s Touch.

Kocher said his third priority is to “remain disciplined in executing our capital allocation priorities and continue to be focused on deleveraging over the near term”.

SunOpta also turned to a bottom-line profit in the opening quarter. Net earnings from continuing operations were $3.8m, compared to a loss of $2.8m a year earlier.

Three consecutive quarters of losses followed that $2.8m negative print – $8.8m in the second quarter of 2023 and $5.7m in quarter three, before settling at a $1.8m loss in the final three months of that year.

Meanwhile, adjusted EBITDA from continuing operations rose 21% to $22.6m, prompting SunOpta to tweak the growth guidance for that metric higher, while also raising the revenue outlook.

EBITDA is now expected in a $88-92m range, compared to $87-92m previously, taking the expected growth rate to 12-17%, from 11-17%.

The new estimate for revenue is $685-715m versus $670-700m, elevating the growth rate to 9-13%, from 6-11%.